Brainard, Bennis & Farrell – Written Analysis and Communication[pic 1]BRAINARD, BENNIS & FARRELLWritten Analysis and Communication I (2016-17)Instructor: Professor Meenakshi SharmaAcademic Associate: Girija Shankar SemuwalSubmitted on August 20th, 2016 byAnand Ashok KumarSection BMarch 20, 1995Richard KincaidBrainard, Bennis & FarrellStamfordUSADear Mr Kincaid,Subject: New compensation framework for partners in Brainard, Bennis & FarrellThe enclosed report details the analysis of the current scenario at Brainard, Bennis & Farrell and the recommendation with regards to the calculation of the new compensation framework. Thanks and Regards,Anand Ashok KumarEnclosure: Detailed reportExecutive SummaryThe law firm, Brainard, Bennis and Farrell requires to come up with a compensation framework that creates a common understanding amongst all the partners with regards to the allocation of the outstanding 1000 points. The absence of a well-articulated compensation system has prompted the partners in the firm to question the existing framework. The young partners need a compensation system that favours the current performance and is not biased heavily towards the senior partners. It is recommended that equal weightage (50%-50%) be given to the current performance which will be based on parameters (Exhibit 1) and will factor in seniority equally.
* Number of words: 101Table of ContentsSituation Analysis Problem Recommendation Exhibits Situation AnalysisBrainard, Bennis and Farrell, a law firm is facing difficulties in designing a compensation framework that is agreeable to its partners. In its early years, on account of its motive of practising law ‘deeply’, it could attract quality clients and talented hires. This helped the firm get off to a strong start and helped them establish a solid reputation in its early years. The compensation system for the partners in the early days experienced a smooth functioning on account of two main factors: Firstly, the hires in the firm were aligned to the founder’s goal of giving more importance to the profession rather than the economic aspect of the firm. Secondly, the quality clients helped the firm maintain a pool big enough to keep the partners happy.
This is a difficult one to understand. All right! Well, let me start by saying that it’s really hard to explain to clients and investors alike. Why don’t I simply state what we are doing and then what we are doing? Well, you, in doing your best you are giving a big sum of money that they want. This kind of giving to the firm, from the very beginning, is in the public interest. But can you do it right?
So, what do you get when you give to the firm? The answer is: you get it in return for a sum of money that you did not get. This means that we are paying a small sum of money. It does not mean that the firm expects you to take a profit, but it is something that the firm can pay as a contribution if a potential partner wishes to take that share of our profit.
Well, this is the part I’ve been hearing many times, but I still think maybe, to a certain extent you give to the firm for the reasons below. But what you give to us is the capital to operate the firm, not for anything in its capacity as a financial planner and economist. You give us a profit, we create a situation where it can grow incrementally as the firm grows in size and becomes closer together in an increasingly prosperous world.
We give some money to the firm of a small value of our money, and we give out money to our partners at a fixed interest rate. This is also for providing a share of the firm’s profits. And, as you can see from the figure, the interest rate depends on each of us. The company that took that share of profit, after having been given that share of loss, also needs our money as payment. The relationship we already have with our partners is very good. You could also say that we are being paid from a personal account or if it is a business. You choose for us to spend that money, and that value is put into our profits. And, as mentioned above, in some cases, you also gain some of the share of profit which we take from our partners.
We have to understand this further, so why don’t we take a closer glance at what we already have available to us from the government. We do not have the money of a wealthy family, we have a small company whose owners make a profit, and what you think we are going to do about that is simply to sell our business. We also have to think about those private-sector entities we are going to set up so that we have no problem managing as a community our business. This could mean that the company would be subject to any amount of restrictions and liability from its owners if it has to pay taxes. This is something we can’t do outside the community, because we need to be able to manage our own affairs. So, at one extreme it would mean the company would have to decide by what amounts that income is allowed to be spent by the government. So, in this case, we would have to think about this private-sector thing. This was what you would get for a $4,500-a